Candice Miller calls for ending National Flood Insurance Program

by Candice Miller on April 28, 2011

Wednesday, April 27, 2011

By Chad Selweski
Daily Tribune Staff Writer

While drenched residents in Arkansas, Missouri and Illinois deal with extreme flooding conditions, several Michigan lawmakers have joined with U.S. Rep. Candice Miller in her claim that the nation’s flood insurance program is a ripoff.

Miller has introduced a bill calling for an end to the federally subsidized National Flood Insurance Program, and she states her case based on a few startling statistics:

While only 6 percent of Michigan’s land mass is flood-prone, the insurance rates dictated by the NFIP are higher in this state than in Florida or Louisiana. Louisiana’s average premium is 18 percent less than in Michigan, and Florida’s average premium is 69 percent less.

Michigan residents have paid in nearly five times as much in NFIP premiums than they have received back over the last three decades.

Since 1978, Michigan property owners have received only 0.1 percent of nationwide flood payouts.

Joining Miller in her fight to disband the NFIP and replace it with a free-market system are state Reps. Anthony Forlini of Harrison Township and Andrea LaFontaine of Richmond.

Forlini has introduced a House resolution denouncing the NFIP and backing Miller’s legislation.

“We’re an ATM machine for the rest of the country,” said Forlini, a Republican and former Harrison Township supervisor. “We … are being extorted by the rest of the country. So, we think it’s time to end the current program.”

While the average annual premium in Michigan is $786, Forlini said many residents of Harrison Township and St. Clair Shores pay more than that, even though Lake St. Clair is about four feet below flood stage.

In Harrison Township, some residents who live one-quarter mile from shore are required to buy flood insurance. One constituent told Forlini that coverage against flooding adds $1,800 a year to his homeowner’s insurance bill.

Miller’s legislation would disband the NFIP and let homeowners living in floodplains buy insurance coverage on the open market. Forlini said he wants to end the NFIP “money grab” and would like to explore the idea of states banding together to create regional programs that would give homeowners better buying power and keep rates low.

Forlini’s resolution received its first reading on the House floor on Tuesday and it has acquired bipartisan support from 21 lawmakers.

At a forum last week in Harrison Township, about 130 people listened to Miller and several state lawmakers discuss the issue. Representatives from the Federal Emergency Management Program, the Army Corps of Engineers and the state Department of Environmental Quality were also on hand.

“Why in the world is the federal government even in the flood insurance business?” Miller said at the event. “I … don’t have a problem with people who live in a floodplain being required to buy flood insurance, but it has to be based on actuarially sound principles.”

In the wake of Hurricane Katrina and other major storms of recent years, the NFIP is saddled with a $19 billion deficit. While deficits have been a recurring problem since the program was formed in 1968, one out of every four property owners in the program receives subsidized rates. At the same time, others in less flood-prone areas are forced to pay significantly higher rates than they should based upon risk.

NFIP statistics show that in fiscal year 2010, Michigan had only 76 claims placed to the program. That compares to nearly 3,000 from Texas and nearly 2,000 each from Louisiana and Florida. Within the Great Lakes region, states such as Illinois, Wisconsin and Minnesota had far more claims.

As for claim payments in 2010, Michigan received a combined $306,000. Texas received $57.6 million, Florida gained $38.5 million, and Louisiana was at $25.2 million. Michigan’s total was just a tiny fraction compared to some small states such as Rhode Island, Delaware and New Hampshire.

Because of suspicions that the rates are set using “political considerations” rather than risk analysis, Miller said Gov. Rick Snyder and former governor Jennifer Granholm both support her bid.

Miller adds one more statistic to enhance her case: “From January through November 2010, Michigan residents paid over $20 million into the NFIP. Compare that to the $45 million total Michigan residents have received back from the NFIP since 1978. In less than one year, Michigan residents paid back almost half of the entire sum they have received from the past 33 years.”